California jobless rate hits new low / At 4.5%, it's the best level in 30 years -- news is even better in the Bay Area

Published 4:00 am, Saturday, November 18, 2006

California jobless rate hits new low / At 4.5%, it's the best level in 30 years -- news is even better in the Bay Area

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California's unemployment rate fell to a 30-year low 4.5 percent in October. During the same month, employers added a modest 9,300 new payroll jobs, the state Employment Development Department said Friday.

The state's unemployment rate is now the lowest it has been since California began tracking it in 1976, according to the department. It was 5.2 percent in October 2005 and 4.8 percent this past September.

"It looks like, unless things really go bad, we'll average below a 5 percent (unemployment rate) for the year," said Howard Roth, chief economist for the California Department of Finance. "The only other time we've done that was at the top of the peak of the tech boom in 2000."

Unemployment rates were even lower in the Bay Area. In the East Bay, the Oakland-Fremont-Hayward area rate was 3.9 percent. For San Francisco-San Mateo-Redwood City, it was 3.5 percent. On the Peninsula, San Jose-Sunnyvale-Santa Clara had a 4.2 percent unemployment rate.

"The Bay Area and Oakland (region) in particular is doing the best (of job markets in the state) now," Roth said.

But the number of new jobs created in the state -- a figure that some economists trust more to gauge the labor market's health -- was mildly disappointing. From January through September, employers had been averaging creation of 13,900 jobs per month. October's slower pace will drag down the year's average.

"People are still employed -- that's what the low unemployment rate tells me. But new jobs are not being added to the economy at a very fast pace," said Sean Snaith, a consultant to Stockton's University of the Pacific Forecasting Center.

The glass-half-full, glass-half-empty statistics show that the overall economy is slowing but is not actually in a downturn, he said. If the unemployment rate were rising while job creation slowed, that would be reason to sound the alarm.

A key question is whether new jobs being created measure up in terms of salary, security and benefits to ones being lost. The answer is a mixed bag.

The leisure and hospitality industry had a strong showing for the year, adding 37,600 jobs from October 2005 to this October. But jobs such as bartender, waiter and hotel housekeeper tend to be low-paying.

Professional and business services also did well, adding 48,000 jobs for the year. But in those cases, it's harder to assess job quality, as the positions could range from highly paid professionals such as lawyers and architects, to lower-paid clerical staff.

Educational and health services, an industry where jobs can range from moderate to high pay, added 26,000 jobs for the year, while government added 34,600.

Not surprisingly, construction, a high-paying industry, lost jobs as residential home-building stagnated. The fact that it lost only 4,000 jobs for the year is probably due to public-works projects such as roads, as well as commercial construction, picking up the slack, experts said.

At the NOVA Workforce Board in Sunnyvale, a nonprofit agency that helps 15,000 displaced Silicon Valley workers a year retrain and find new jobs, director Mike Curran said he thinks the South Bay jobs being lost tend to be middle-class jobs with good benefits that people had held for years. Many of the new jobs being created don't have benefits, although others are high-end positions.

"Over time, the balance of middle-class jobs is shrinking," in part because of rising productivity and the shift toward outsourcing, he said.

At Monroe Personnel Service in San Francisco, a small- to medium-size employment agency that places both temporary and permanent workers, owner Debra Mugnani Monroe said she found the low unemployment rate surprising. "We still have a plentiful supply of candidates coming through" looking for jobs, she said. At previous times of low unemployment, "we were scrounging to find people."

Still, this year's job market feels more robust than a few years ago, she said.

"Three years ago during the bad times, clients were watching every penny. They would say, 'This project is only two days.' Now they're not watching the bottom line as much, they're giving themselves the luxury of having the phones answered. There is not as much belt-tightening, at least with temps."

The unemployment rate and the jobs-creation numbers are generated from two separate surveys. The unemployment rate is based on a survey of households while the payroll-jobs numbers come from a survey of employers. That partially explains the disparity, but economists still scratch their heads over the two diverging pictures of the job market.

On one hand, Nancy Sidhu, senior economist for the Los Angeles County Economic Development Corp., said she thinks the job-creation number could be understated.

"They aren't catching in their monthly survey all the jobs actually being created," she said. "The folks who are studying this to a fare-thee-well try to estimate the birth and death rate of firms, but they are underestimating what is really going on."

But other economists think the unemployment rate is actually higher than the official figure because after people have been without a job for a while they are no longer counted as unemployed, either because they are so-called "discouraged workers" who have stopped looking for work or are underemployed as "consultants" or have other on-again, off-again work.

Bay Area jobless rates

October's unemployment rates around the Bay Area are lower than the statewide rate of 4.5 percent. Bay Area rates in percent: